Bank of Korea: "Commodity Price Rise and Social Distancing Lift to Keep Inflation Rate in 4% Range for a While"

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] The Bank of Korea has forecasted that the consumer price inflation rate will continue its upward trend in the 4% range for the time being, due to rising raw material prices and the easing of social distancing measures.

On the morning of the 3rd, the Bank of Korea held a 'Price Situation Review Meeting' chaired by Deputy Governor Lee Hwan-seok to assess the recent price situation and future price trends.

According to Statistics Korea, the consumer price inflation rate in April was 4.8%, marking the highest level in 13 years and 6 months since October 2008 (4.8%).

Deputy Governor Lee Hwan-seok stated, "Consumer prices have shown the highest inflation rate since the global financial crisis, and inflationary pressures are expected to continue, maintaining an upward trend in the 4% range for the time being."

It is analyzed that supply chain disruptions have intensified due to the Ukraine crisis and lockdown measures following the resurgence of COVID-19 in China, and the impact of the war is likely to prolong the global food price increases, especially for grains. In the case of energy prices, factors such as the expanded reduction in fuel tax will act to slow the inflation rate, but uncertainties remain high due to the possibility of expanded sanctions against Russia amid the prolonged Ukraine crisis.

Deputy Governor Lee emphasized, "Since the price increases are expanding mainly in items with high purchase frequency and expenditure share, such as gasoline, food, and dining out, which have a strong impact on consumers, it is important to stably manage the inflation expectations of economic agents."

He added, "We will closely monitor the developments of the Ukraine situation, trends in raw material prices, and the effects of the easing of social distancing measures on prices going forward."